[PA66 Daily Review] Crude Oil Slump Weighs on Costs, High-Priced Purchasing Remains Sluggish as the Market Fluctuates Lower

1. Today's Summary

Today, the domestic PA66 market is experiencing fluctuations and declines, with downstream demand for high-priced purchases remaining weak and market supply-demand competition intensifying. The external market shows significant bearish signals, as the easing of US-Iran sanctions has led to a broad decline in international crude oil prices, causing domestic INE crude oil to also decline, putting overall pressure on the cost side of the industry chain. Industry facilities are operating at relatively low capacity, with the current PA66 capacity utilization rate at only 56%. The raw material sector is showing mixed performance, as Invista has raised the spot price of hexamethylenediamine, but downstream demand is lacking, resulting in abundant spot supply in the market and an overall weak market performance.

2. Spot Overview

In terms of spot prices, the domestic PA66 market shows a divergence in quotes, with factory ex-factory prices remaining stable while trade spot prices have significantly declined. The national factory quotation for industrial plastic-grade chips remains stable at 18,500 yuan/ton, with no increase or decrease adjustments; however, the spot price in the Yuyao market for industrial plastic-grade chips has fallen to 18,500 yuan/ton, a drop of 250 yuan/ton in a single day, representing a decrease of 1.33%. Currently, the mainstream reference range for domestic factories is 18,000-19,000 yuan/ton, and the negotiation range for cash-on-delivery spot transactions in Yuyao, East China, is also synchronized at 18,000-19,000 yuan/ton.

In terms of production and profit, domestic PA66 polymer enterprises maintain low operational loads, with an industry capacity utilization rate of 56%. There are long-term expectations of supply contraction in the industry, but downstream procurement remains sluggish, leading to a gradual accumulation of inventory pressure for enterprises. Raw material cost pressures still exist, and the industry's production profits are running close to the cost line, with factories having no obvious profit margins. While there is a willingness to maintain prices on the production side, it is difficult to reverse the downward trend in spot prices.

In terms of upstream and downstream raw material market conditions, upstream adipic acid prices remained firm in a stalemate, with spot prices in East China ranging from RMB 7,850 to 8,050/ton. Weakness on the raw material side persisted, and refinery price cuts weighed on market sentiment. Although suppliers attempted to support prices through maintenance shutdowns, traders and downstream buyers maintained a strong wait-and-see attitude, resulting in very few firm transactions. The only positive factor on the raw material side was INVISTA’s increase in the spot price of HMD to RMB 26,300/ton, but a price hike in a single feedstock was insufficient to offset the dual bearish pressure from crude oil and demand.

3. Market Forecast

In the short term, the PA66 market is expected to maintain a weak and range-bound trend, with little chance of a recovery or rebound. On the bearish side, the continued sharp decline in international crude oil prices has weighed on sentiment across the entire chemical industry chain. Downstream end-users show clear resistance to high-priced raw materials and chips, mainly purchasing on a just-in-time basis, with no large-scale restocking. Ample spot supply in the market is also pressuring prices. On the bullish side, low operating rates at plants, combined with rising hexamethylenediamine prices, provide bottom support from the cost side, limiting the downside for prices. Overall market confidence remains insufficient, and the weak short-term trend is unlikely to change.

Editor: Abby

Source: Longzhong